Chris Reykdal of the State Board of Community and Technical Colleges has started the analysis of Gov. Chris Gregoire’s proposed budgets for the balance of this budget year as well as the coming 2009-11 biennium. Gregoire presented her budgets on Thursday, Dec. 18. Here is a synopsis of Reykdal’s comments:

"I want to highlight the following statement that is included in the Governor’s Higher Education Summary: “The lower rate of reduction for the community and technical colleges is in recognition of their unique mission in job training and skills development essential to the state’s economic recovery.”

"We should all be very proud to work for a system whose work not only improves the lives of individuals but is recognized as a substantial contributor to the State’s economic vitality.

"We will need several more days to gather further detail and ask our follow-up questions of the staff at the state Office of Financial Management. We will provide further guidance as we learn more.

Chris ReykdalDeputy Executive Director – Finance

Supplemental (current year) budget

A $32.1 million reduction for the remainder of the current year, which is approximately 4.3 percent, instead of the anticipated 4.1 percent cut. An additional $1.6 million was cut in self-insurance savings. The revised 4.3 percent reduction level is expected to enable a financial emergency declaration. Such a declaration is subject to: 1) the legislature passing the Governor’s supplemental budget recommendations without change, and 2) State Board action.

Tuition remains unchanged

Enrollment targets remain unchanged

Provisos remain the same with one exception. The Governor’s proposal collapses all of the separate high-demand enrollment provisos into a single high-demand proviso. Therefore, the system would report a single high-demand enrollment number at the end of the current academic year.

Proposed 2009-11 Operating Budget

A $100 million reduction off of the maintenance level. This cut includes the reductions already taken during the current year (the newly revised $32.1 million). This means that the current year cut ($32.1 million) is permanent in each of the next two years ($64.2 million for the biennium). Therefore, the CTC system is being asked to cut an additional $35.8 million for the next biennium. The total system cut (not including tuition revenue increases) is approximately 6.5 percent.

Tuition increases for resident undergraduate students are limited to 5 percent in the first year and another 5 percent increase in the second year. The SBCTC and university regents would continue to be able to set tuition on all other categories of students.

·With tuition yields added back for the system, our net cut for the 2009-11 biennium is calculated at 4.3 percent.

No fee increases are proposed.

Enrollment targets remain the same next biennium,139,237.

Only three legislative provisos remain next biennium:Worker Retraining, Job Skills and a new $3.5 million for the student achievement initiative.

Higher health-benefit costs are fully funded, based on existing agreements. Employees will continue to pay 12 percent and the employer will pay 88 perent of the cost on average.

Retirement contributions from the employer are reduced based on actuarial estimates. Questions about this will be posed to OFM staff.

$1.5 million is added to last session’s Health Care Career Advancement effort. This is described in a budget note from OFM staff but not contained in a budget proviso.

No salary increases are provided to any employee groups.

Please see the attached fiscal year summary for more details on the 2009-11 operating budget proposal.

Proposed 2009-11 Capital Budget

A $477.3 million total, from a combination of appropriated bond funds, certificates of participation and tuition building fees. The capital budget was made possible by some large-scale changes, including:

Assuming the repeal of the statutory debt limit and moving to the constitutional debt limit (9 pecent max);

Pushing the unofficial working debt limit from 8.5 percent to 8.75 percent;

Expand general state revenues to include several previously dedicated accounts that hadn’t considered part of the base when calculating the debt limit. With the inclusion of these accounts, the bond availability increased from $1.6 billion to $2.2 billion for state capital projects.

Assumptions about lower interest rates in the future.

The capital budget includes:

Bond funds proposed at $353.4 million, a reduction from $438.5 million in the current biennium. The CTCs would get 50 percent of all bonds authorized for higher education. Another $109.8 million is provided as alternative financing (COP funding) against the Building Fee Account – this includes all four of the major growth projects that are scheduled for construction in the 2009-11 biennium.

$22.8 million for maintenance and operations now funded with taxable bonds instead of cash sources. These M&O funds are separate from the $477.3 million project list.

All of the college specific COPs proposed by the CTC system are provided for in the Governor’s budget.

A few projects were spread across several biennia or delayed.

Several adjustments were made in project costs by the OFM analysts based on their review of project estimates.

OFM removed funding for the Repairs B category.

See the attached Governor Proposed capital project list for more details.

Additional Observations

University budgets are reduced by 13 percent on average for the 2009-11 biennium (approximately 6 percent after tuition revenue is factored in).

University tuition increase for resident undergraduate is assumed to increase by 7 percent in the first year of the biennium and another 7 percent in the second year. These are also used for the upper division CTC applied baccalaureate degree programs.

State Need Grant is increased commensurate with tuition assumptions, but the eligibility threshold has been reduced from 70 percent to 65 percent of Median Family. There are additional “step” reductions for families with Median Family Incomes from 50-64 percent

Reduction percentages in other state appropriations

K-12 – 5.6 percent

Public Safety – 6.3 percent

Early Learning – 6.4 percent

Health Care and Human Services – 12.2 percent

Natural Resources – 12.2 percent

No statewide salary increase for any employee groups

I-728 class size reduction funds in the K-12 system are cut back by 24 percent for the 2009-11 biennium.